COVID-19 has had an impact on almost every industry, whether for better or worse, and advertising is no exception. Traditional advertising, like print, radio, television, and out-of-home ads, have seen significant consequences as viewership trends morph and change in the wake of the pandemic. This trend is particularly clear in magazine advertising expenditure, which will shrink by 20% in 2020.
In advertising, ad spend often follows the rise – or fall, as the case may be – in gross domestic product. Over the last decade, global GDP has risen substantially, a move reflected in the ad sales market: in 2019, the industry ballooned to $646 billion. Before the onset of COVID-19, analysts estimated that number to increase to $865 billion by 2024.
However, coronavirus has changed all of this, resulting in a dramatic drop in ad spend. In China alone, revenue is down 15% versus last year, while Europe saw a reduction averaging 9%. In the US, decreases have ranged from 50% in the case of TV and radio to 99% for billboard ads.
While business sectors of all sorts, from restaurants to in-store shopping, hope to rebound sooner rather than later, some likely won’t come back in the same manner. This is notably true for advertising as well which is resulting in COVID-19 accelerating digital transformation faster than expected for traditional media.
Consumer Behavior Is Changing
Advertising closely follows consumer behavior. After all, the sole purpose of ads is to influence the ways in which consumers approach goods and services, and it makes no sense to invest in areas that have no audience. This has significantly impacted things like out-of-home advertising, cinema ads, and print advertising while quarantine has forced people to stay at home. On the other hand, in-home media has skyrocketed, including digital TV viewership, social platforms, and gaming. Digital video spend is among the areas seeing the most growth; streaming has replaced linear television in a big way, with online viewership nearly doubling as compared to last year.
While everyone is eager for COVID-19 to pass, the ways in which society has learned to deal with confinement will likely influence modern behavior for years to come. This includes things like working from home: many companies, like Google, are adopting hybrid workplace policies that will potentially extend indefinitely. As such, advertisers are encouraged to find ways to meet these anticipated long-lasting changes to modern lifestyles.
Traditional Advertising Needs to Act
Traditional advertising has been losing ground for several years now, but COVID-19 has only expedited this process. With lockdowns across the country and around the world, fewer people are going out into the world and accessing brands in normal ways. The likes of print ads and outdoor advertising have all suffered in the wake of COVID-19.
Both GroupM, a media company owned by WPP, and IPG’s Magna predict that in 2020, digital advertising will be the first year in which digital media overtakes traditional spending. While all ad spending is expected to slide around 11%, traditional ad formats are likely to decrease by almost double.
Print advertising has been in serious decline for years, with newspapers shutting down and magazines moving to solely web-based distribution. COVID-19 has only hastened this trend, with fewer people purchasing newspapers while out and about and more readers cutting costs by canceling subscriptions. In the print world, newspapers are forced to adapt or face irrelevance, and this generally means going digital. While print media still commands higher pricing than its digital counterparts, it’s hard to justify investing in a product with a continuous decline in readership. Advertisers used to spend the bulk of their money on print media are going to pivot, and sooner rather than later.
Out-of-home ads can be a great way to communicate a message. However, this is most effective when people are regularly leaving their homes – and during a pandemic, staying home has become the norm. Some OOH providers are adapting their strategies to focus closely on digital out-of-home, making it easy to place ads at a rapid pace where necessary. Instead of spending money on billboards, no one is seeing, for example, advertisers can follow the eyeballs to maximize investments.
Radio is still popular, but far less so than it used to be. Platforms like Spotify, Amazon Music, Apple Music, and Pandora have taken substantial revenue away from FM radio, and the pandemic hasn’t helped, either. Most people listen to the radio primarily in their cars, and when no one is commuting, no one is listening. Many broadcasters already incorporate a number of digital products, from streaming to podcasts, but delving further into this area will only become more important in the weeks and months ahead.
Few industries have been affected to the extent of airlines. With so few people traveling, whether out of preference or circumstance, airlines are suffering – and that translates to in-flight advertising, too. However, that doesn’t mean in-flight ads are dead and gone. In fact, airlines need every extra revenue stream possible, and advertising could be a big advantage to that end. Those who can utilize digital services to spur transformation in the industry will be able to take advantage of ad opportunities as the industry struggles to right itself in the wake of the new normal.
Digital Transformation Movement
No industry can resist change forever, and advertising isn’t immune. However, the pandemic has only made the normal evolution of business trends more pronounced. Traditional advertising has been on the decline for years, but COVID-19 has certainly expedited this process. The effects of the pandemic have accelerated digital transformation across all forms of traditional media and will continue to do so as companies that still offer this media look to protect their advertising revenues now and in the future.